SHARES IN Irish Life Permanent (ILP), the State’s largest mortgage lender, rose 12 per cent to €5.17 after it completed a key refinancing of €3 billion in debt due to mature in the coming weeks.

ILP’s share price rose more than 18 per cent shortly after it announced it had received the final €1 billion of €3 billion in funding maturing in the third quarter of the year.

A spokesman for ILP declined to provide the exact cost of the funding, but said the “blended cost” would be in line with the assumed net interest margin of 100 basis points for this year, as forecast last month.

The funding is expected to cost the bank about 100 to 110 basis points (1-1.1 percentage points) above the interbank rate.

The company has also raised €100 million worth of bonds, which will count as lower tier-two capital, required by regulators to protect banks against losses.

“People were concerned about funding,” said Anna Lalor, analyst at Goodbody stockbrokers. “So the market is just happy to have this confirmed.”

Bank of Ireland raised €1.25 billion in debt last month in a public two-year floating-rate note, priced at 105 basis points above the three-month euro interbank rate.

ILP finance director Peter Fitzpatrick said last February that the €3 billion would cost the company 0.6 per cent to 0.7 per cent more at that time, based on current costs, but funding costs have risen since then due to the credit crunch.

AIB said at its half-year results yesterday that it had raised €4 billion of €6 billion in funding due to the mature this year.

Chief executive Eugene Sheehy said the market dislocation had driven AIB’s funding costs up by €68 million in the first six months of the year, compared with the same period last year.